UK Spring Forecast 2026: What businesses and individuals should know

Yesterday’s Spring Forecast, delivered by Chancellor Rachel Reeves, provided an important update on the current state of the UK economy and government finances.

While the forecast did not include any major new policy announcements, which are typically reserved for the Autumn Budget, it offered key insights from the Office for Budget Responsibility (OBR) on economic trends and what we might expect from the coming months.

The OBR revised down the UK’s growth forecast for 2026, with GDP expected to rise by around 1.1% this year. However, growth is anticipated to pick up to about 1.6% in both 2027 and 2028, signalling moderate expansion ahead.

Inflation is now expected to fall more quickly towards the Bank of England’s 2% target, which could ease cost pressures for households and businesses, but with uncertainty surrounding the price of oil and gas in recent days, inflation could yet rise again.

At the same time, unemployment is projected to peak later this year before declining through the forecast period.

The Chancellor emphasised the importance of stability in public finances, but with ongoing global uncertainties, including geopolitical tensions, the Government are likely to move cautiously.

Tax Director, Jamie Spender, commented: “The Spring Statement is somewhat less anticipated than the Autumn Budget, as it is not a fiscal event to outline government tax policy and spending, but instead an opportunity for the government to report on the state of the UK economy considering the OBR’s forecasts.

“Whilst previous Autumn Budgets have prompted a significant number of transactions in anticipation of tax changes, this event was less important for tax planning.

“It does however provide insight into the impact of government policy on spending and taxes.

“The Chancellor noted that inflation had dropped to 3% and is heading towards the 2026 target of 2%, growth forecasts have been revised down from 1.4% to 1.1%, and unemployment is expected to peak at 5.3% in 2026 compared to the original forecast of 4.9%, but then decline in 2027.

“However, there is much uncertainty around the assumptions used in this forecast that could have a material impact on the figures presented, in particular considering the evolving situation in the Middle East.

“With the cost of oil increasing as a result of the conflict, coupled with the shift away from reliance on Russian oil, it is expected that fuel and energy costs will push inflation above the current level of 3% and therefore make the government’s target of 2% hard to achieve.

“High inflation will potentially prompt the Bank of England to hold interest rates at current higher levels and perhaps increase the rates with the effect of making borrowing more expensive.

“The potential increases in inflation and interest rates are likely to add to existing pressures around cost of living and unemployment, which may prompt the Chancellor to review tax rates in the Autumn Budget later this year.

“It remains to be seen how the conflict in the Middle East will impact the UK economy, but it is clear that the OBR forecasts are not likely to be an accurate view once the true extent is realised.”

For businesses and individuals alike, these forecasts underscore the value of professional advice. Economic conditions are shifting, and tailored planning can help you navigate changes in growth, inflation, taxation and cash flow.

If you’d like support analysing how the latest forecasts affect your finances or planning ahead for the Autumn Budget 2026, please get in touch — professional guidance can make all the difference.